Since the news of Thomas Cook’s demise a lot of focus has been on its travel customers. But beyond repatriating stranded holiday makers, the impact of large scale insolvencies such as Thomas Cook, Carillion and British Steel can be far reaching.

Those relying on the likes of Thomas Cook for business may also face financial distress as the impact of its insolvency ripples down the supply chain.  Potentially impacting suppliers of goods and services, those who relied on Thomas Cook’s business outside of the UK, employees and landlords.

There has been considerable effort to minimising the blow to stranded customers by sourcing repatriation flights (whether or not they were ATOL protected or not) at or close to the time their holiday was due to end. There are also avenues to claw money back for those who booked with ATOL protection or via credit card providers.

Of course, not all travellers will recover all costs, and there will be many customers struggling to find a viable alternative for holidays, particularly those who still need to fly on specific dates and/or get to a specific destination. They may find alternatives are now higher priced than they previously were as people battle for seats on planes.

It has been reported in the news that some holidaymakers have had to pay much more for replacement flights – a painful reality for some, but opportunity (rightly or wrongly) for other tour operators.

But there lies a long list of others who may actually bear the brunt of this insolvency.

Suppliers of goods and services

Many different suppliers will be affected by Thomas Cook’s liquidation from those providing foodstuffs for sale on board, those who supply parts and maintenance, anyone who had a contract regarding the sale or build of further planes and IT service right through to those who supplied stores with office furniture and glossy brochures.

In fact, any person who sold services to Thomas Cook is likely to feel the financial impact of its failure.

Thomas Cook is likely to have been a big customer to a lot of businesses, who may be left without payment for work, loss of continuing work, and possibly pressure from their own suppliers who they needed to provide those services or goods.

Whilst there may be some suppliers who benefit from any purchaser’s decision to acquire parts of the business or assets, the effect on many more suppliers may be devastating, producing a domino effect all around the sector as businesses get into difficulty as a result of one major insolvency.

Businesses even if not affected by the Thomas Cook insolvency should consider the impact of their key customer going bust, and what the effect would be on its business. The failure of Thomas Cook underlines that too much reliance on one customer can leave companies exposed.

Beyond the UK

Hoteliers who have block booked rooms for Thomas Cook may suffer a loss of revenue given all future bookings have been cancelled. If they have not been paid, then they may only recover money from the liquidation as an unsecured creditor.

In the short term at least, future income may be in doubt.

They will also lose out on additional income from the sale of add ons (food, drinks, excursions etc) from holidaymakers whose holidays are cancelled and have returned home or from those they expected to arrive but won’t if they do not re-book.

Other third party suppliers who relied on Thomas Cook’s business- perhaps those who dealt with airport transfers or excursions for Thomas Cook clients, will be similarly affected if they have not been paid or were reliant on future bookings.

Depending on how reliant such businesses were on Thomas Cook’s business, this loss of custom could put many businesses around the globe at some risk themselves.

There may also be a knock-on effect on customer pricing in the immediate term, as those affected try to recoup losses.

Employees

Employee contracts are terminated. They can make certain claims from the government but they may find themselves out of pocket for monies due, not to mention the fact they need to try to find alternative employment.

Depending on what happens to the Thomas Cook business there may be buyers who will be looking to recruit office or flight personnel, but employees do not automatically transfer under TUPE in liquidation.  Even if there are openings at any employer who buys parts of the business, they will likely need to apply for the job like anyone else.

Employees need to be looking out for opportunities where they can. For example, Virgin Atlantic are giving flight crew members the chance to apply to Virgin in a new recruitment window opened just for them.

Landlords

Thomas Cook was first known as a high street business and was one of the oldest names in town. At the point of liquidation there was an estimated 600 Thomas Cook shops on the high street.

Landlords need to ask the liquidators what the plan is for their store. If the liquidators are looking to disclaim the lease they might want to look for a new tenant now. An empty property will attract business rates – although the landlord will be entitled to relief for the first three months, but given current pressure on the UK high street the possibility of an empty property is not attractive.

Summary

The fall out of the Thomas Cook insolvency extends far beyond its travel customers. Whilst the headlines focus on the impact on customers, the unfortunate fact remains that for those in the supply-chain, employees and landlords, there are likely to be more difficult times to come.